Cash Transfers, Behavioral Changes, and the Cognitive Development of Young Children: Evidence from a Randomized Experime

1. Cash Transfers, Behavioral Changes, and the Cognitive Development of Young Children: Evidence from a Randomized Experiment Karen Macours (Paris School of Economics) Norbert Schady (IADB) Renos Vakis (WB)

2. Introduction • Food security and nutrition, in particular for young children, often motivated for it’s importance on cognitive development during early childhood • Yet, often early childhood cognitive development outcomes are not measured per se • Leads to extrapolation of nutrition (anthropometric) results to cognitive development • E.g. debate on critical ages (first 2-3 years of life) for childhood nutrition interventions • But we can obtain observable measures of ECD that are standardized (like anthro)

3. Motivation • Cognitive development in early childhood is an important predictor of success throughout life • Literature on how nutritional supplements and early childhood stimulation programs affect early childhood development • Much less is known about programs that affect investments of parents directly

4. Motivation • Conditional cash transfer programs: • Are extremely popular in the developing world (29 countries and counting), especially in Latin America • Have been evaluated extensively to assess impacts on school enrollment and attendance, as well as on health service utilization, and nutritional and health status • But little evidence available on the impact of cash transfer programs on cognitive and emotional development in early childhood • Yet there is an open debate on longer-term returns to human capital acquired through CCTs (achievement, income, ….) • We analyzed the impact of the Atención a Crisis program, a conditional cash transfer (CCT) program, on cognitive development outcomes in early childhood in Nicaragua

5. Outline • Intervention • Context, data, outcomes • Results on ECD outcomes • Persistence of effects • Transmission mechanisms • 3 risk factors for child development • Is transfer income used like other sources of income?

6. Intervention Atención a Crisis program • Cash payments to mothers: ~18 percent of pce for median household • Social marketing of program: intended to benefit children, encourage dietary diversity • Facilitates social interactions on human capital investments • Conditions: • Schooling • Health check-ups for preschool-aged children, but not monitored • Objectives: • Short-run safety net after a drought shock • Facilitate long-term risk management through income diversification • Three treatment packages: • CCT • CCT + vocational training program • CCT + productive investment grant

7. Context, data, outcomes Where? 6 municipalities in rural Nicaragua with high levels of extreme poverty and frequent droughts Who: Households in sample are very poor • Average years of schooling: • Fathers: 3.5 years • Mothers: 4 years • 27 percent of children stunted • 82 percent live on less than 1 US $ per capita per day

8. Context, data, outcomes Experimental design • Random assignment of 56 communities to “treatment”, 50 “control” • Baseline survey: April-May 2005 • Proxy means test: households above threshold ineligible (<10 percent of households) • 3,000 eligible households in treated communities, 1,000 potentially eligible households in control communities • No evidence of significant differences between treated and control households at baseline • Households started receiving payments in November 2005: Average household received payments for 9 months • Follow-up survey: July-August 2006 • Program ended in December 2008 • Second follow-up Survey in 2008/09

9. Context, data, outcomes Attrition • Very low levels of attrition: 1.3 percent of households were not re-interviewed in 2006, about 3% in 2008/09 • Uncorrelated with treatment • Very similar characteristics of full sample of households and households re-interviewed Compliance with experimental design • Very high levels of compliance with experimental assignment • 95 percent of households assigned to treatment group received transfers • Only 1 household in control communities received transfers • Of treated households, more than 95 percent received the full amount of the transfer for which they were eligible

10. Context, data, outcomes • Denver Developmental Screening Test: Four subscales (a) Social-personal: social interactions, ability of child to dress and eat on her own, imitate others (b) Language: use of sounds, words, sentences (c) Fine motor skills: manual tasks such as drawing, playing with cubes, reaching for objects (d) Gross motor skills: crawling, walking, jumping, throwing • Test scaled based on number of tasks for which child is in the bottom quartile of the reference population distribution (or alternatively in the bottom decile) • Applied to children 0-83 months of age

11. Context, data, outcomes Additional tests applied to children 36-83 months of age • TVIP: Test of receptive language 3. Memory for names: Visual memory from Woodcock-Munoz battery 4. McCarthy: • Short-term memory: repeating strings of numbers • Leg-motor skills: walking on tiptoes, standing on one foot 5. BPI: Behavioral Problem Index Incidence of behavioral problems • All were piloted in our population, and minor adjustments were made, as needed

12. Choice of instruments • All outcomes (except BPI) can be age-standardized using “reference populations” (like anthropometrics z-scores) • All have been used extensively in the literature, including in developing countries • Standardized Spanish-language version of test existed (for tests involving language, i.e. Denver, TVIP, and the memory for names) • Ease of standardized administration of test • by non-experts, • in (often difficult) field conditions, • with children who are not familiar with (fancy) toys • Applicability of tests in population with potential large average delays • Duration of tests (~ limited attention spans)

13. Pre-testing process • Wider set of tests tried in pre-testing • Appropriateness of tasks and test items • Minimize scoring mistakes • Timing • Variation in population • Power to distinguish sufficiently between observations in the left tail • Establishing of trust with extremely shy children • Creation of optimal test environment, given field circumstances • And in particular: prevent interference and observation by other household members (~ minimize risk to human subjects)

14. Table 2: Frequency of delays in control communities relative to international norm

15. Context, data, outcomes In summary: • Children in our sample have very large delays in a variety of domains: • Especially large in language and in their social-personal skills • Much smaller for motor skills • Delays tend to increase with child age • Socioeconomic gradients in cognitive outcomes—even within our sample of very poor children • Gradients steepest for language, absent for the BPI => There may be potential for cash transfers to improve outcomes

16. Main results 1. Significant program effects on cognitive skills • Program effects concentrated on outcomes with largest delays, steepest gradients • Effects persist 2 years after the program ended 4. No evidence of significant heterogeneity by gender 5. Evidence of significant heterogeneity by child age • Program effects on language concentrated among older children, ages 5-6

17. Main results: Robustness 5. Findings robust to a very large set of alternative specifications • With and without controls • Only children in household of main beneficiary • Only children of main beneficiary • Not removing age effects • Not standardizing • Not dropping 1 percent outliers • Using narrower age range for Denver (upto 6) • Not including children upto 10 months of age (in utero exposure) • Using tasks in bottom decile (instead of bottom quartile) for Denver • Using only observed (not reported) outcomes for Denver

18. Transmission mechanisms (1) Focus on three risk factors for child development • Inadequate nutrition • Inadequate stimulation • Health status—including lack of micronutrients, exposure to infectious disease, caregivers’ mental health

20. Transmission mechanisms (1) Focus on three risk factors for child development • Changes tend to be larger for older kids—often significantly so (for example, for child food intake, whether a child is read to, whether they have been taken to a growth check-up, have received micronutrients, or de-worming medication) • Pattern consistent with the observed improvements in final outcomes

21. Transmission mechanisms (2) Is transfer income used like other sources of income? Maybe… • Money is fungible Maybe not… • Women received transfer • Women are thought to spend a higher fraction of the resources they control on children than men (for example, Lundberg et al. 1997) • Social marketing of program • Kooreman 2000 on child support income in Holland • Fraker et al. 1995 on food stamp “cashouts” in the US • Estimate changes in intermediate inputs among treated households in three critical “risk factors” identified in the literature • Food • Stimulation • Use of preventive health care

22. Transmission mechanisms: Food Engel curves at follow-up

23. Transmission mechanisms: Food Engel curves

24. Transmission mechanisms: Composition of food expenditures

25. Transmission mechanisms: Stimulation

26. Transmission mechanisms: Preventive health care

27. Transmission mechanisms: Conclusions • Upwards shift in the Food Engel curve • Changes in the composition of food expenditures • Decrease in food share devoted to staples • Increases in food share devoted to animal proteins, and fruits & vegetables • Similar results for child food intake • Increase in stimulation: • Increase in proportion of children at a given expenditure level who have access to books, pen & paper • Significant increase in number of hours read to • Improvements in some measures of child health • Program effects on these “risk factors” tend to be larger among older children • Behavioral changes: At any level of expenditures, treated and control communities spend resources differently

28. Conclusions • Cash transfers have modest but significant effects on some dimensions of child development after only 9 months • Impacts persist 2 years after the program ended • Evidence of program effects on risk factors for child development • Nutrition • Stimulation • Child health • Transfer income appears to have been used differently from other sources of income: suggests there were behavioral changes

29. Implications • Large delays and the potential for catch-up indicate need for policy attention • Interventions that facilitate investments made by parents to reduce risk factors can result in ECD gains • Account for gains in ECD when considering gains from food security programs • This might put focus on other aspects of food security (~ quality of the diet)

30. Next steps • Next round of panel collected in 08-09 • Different treatment groups have different income levels (though differences are small) => Further disentangle income effect from behavioral changes • Complementary ECD intervention focused on parental care • Role of information for changes in investment behavior in early childhood • Allocated randomly on Atencion a Crisis treatment and control • Role of mothers versus fathers • Related work • Medium/Long-term evaluation of the original CCT program in Nicaragua, taking advantage of randomized phase in • Do kids that benefitted in first 2 years of life have better cognitive and schooling outcomes 10 years later ?

31. Thank you ! karen.macours@parisschoolofeconomics.eu